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Wednesday, November 27, 2013

defination of Accounts and accounts classification



Financial transactions change the financial position of the business. By transaction sometime cash received sometime paid, sometime income earned sometime expense incurred, sometime asset increase sometime decrease, and again sometime liability increase sometime decrease. Income, Expense, Asset and Liability are not a particular type, there are different types of many such items in business organization. In a particular table/chart the income, the expense, the asset or the liability that is affected by transaction are recorded as per double entry system and it calculates the gross & net amount of that particular item. Accounts are prepared to know the continuous change and the net amount of each item. 
‘T’-Table

Account’s Title

Debit
Account’s code no……
Credit



Date
Particulars
J.F.
Taka
Date
Particulars
J.F.
Taka











‘Moving Balance’-Table
Account’s Title  Account’s code no…
Date
Particulars
J. F.
Debit  Taka
Credit  Taka
Balance
Debit
Credit









Classification of Accounts
We can classify accounts very easily by analyzing the Accounting Equation (A=L+E)
Assets = Liabilities + Equity or Capital brought in by the owner + Assets
            = Liabilities + Income-Expense -Withdrawn by the owner 
By observing the above equation it possible to identify, that Accounts are five types.
1. Assets 2. Liabilities     3. Equity      4. Income 5. Expense